logo-loader

GlaxoSmithKline sells Indian Horlicks business to Unilever

Published: 05:32 03 Dec 2018 EST

Horlicks products
Unilever is expected to try and rejuvenate the Horlicks brand following a recent sales slowdown

GlaxoSmithKline PLC (LON:GSK) has completed the sale of its Indian Horlicks nutrition business to fellow FTSE 100 firm Unilever plc (LON:ULVR), boosting the latter’s position in the emerging market.

The US$3.8bn (£2.98bn) deal covers GSK’s health food and drinks portfolio in India, Bangladesh, and 20 other markets predominantly in Asia and includes its 72.5% stake in India-listed GlaxoSmithKline Consumer Healthcare.

READ: GSK confirms it is considering merger of consumer healthcare unit

In its own announcement on the transaction, Unilever said the sum for the deal would be paid in cash and shares in its Indian subsidiary, Hindustan Unilever Limited (HUL).

Following the transaction, GSK will hold a 5.7% stake in HUL which it intends to sell in tranches at times it considered appropriate.

The Horlicks brand dominates the health drinks market in India, with Unilever expected to try and re-energise the brand following a slowdown in sales growth in recent years.

GSK said earlier in the year that it was considering selling the business amid the sluggish sales, although it would still retain a presence in India through its over-the-counter and oral health brands such as Sensodyne and Eno.

Proceeds to finance Novartis buyout

GSK said the net proceeds from the deal would be around £2.4bn, which would be used to help fund a US$13bn buyout of its consumer healthcare joint venture partner Novartis announced in March.

READ: GSK buys out consumer healthcare venture partner Novartis for US$13bn

The joint venture was formed in 2015, combining GSK's consumer healthcare business with Novartis's over-the-counter (OTC) division. The venture includes well-known brands such as Panadol headache tablets, muscle gel Voltaren, and Nicotinell nicotine patches.

At the time, GSK said it expected the deal to be accretive to adjusted earnings from 2018 and to strengthen cash flow generation.

Unilever sees off Nestle and Coke

The deal marks another step by the drugmaker to streamline its business, with the sale having been subject to a fierce auction process where Unilever saw off interest from both Nestle and Coca-Cola (NYSE:KO).

READ: Unilever CEO Polman to retire in wake of investor revolt over headquarters U-turn

It is also Unilever’s first major deal since the retirement of its chief executive Paul Polman last week following a shareholder revolt that saw the firm abandon plans to move its headquarters out of the UK.

Unilever’s Food & Refreshment chief hails “transformative” acquisition

Nitin Paranjpe, president of Unilever’s Food & Refreshment business, said the acquisition was “transformative” and would allow the group to enter the Health Foods Drinks category in the market.

Meanwhile, GSK chief executive Emma Walmsley said Unilever was “well-placed” to maximise the potential of the Horlicks brand while the proceeds would be used to “support the group's strategic priorities, including investing in our pharmaceutical business”.

In mid-morning trading Monday, GSK shares were up 0.6% at 1,631p while Unilever shares were up 0.7% at 4,269p.

BenevolentAI advances novel ulcerative colitis treatment through Phase 1a trial

BenevolentAI (OTC:BAIVF) chief scientific officer Dr Anne Phelan joins Proactive's Stephen Gunnion with positive safety data from the Phase 1a, first-in-human, clinical study of BEN-8744 in healthy volunteers. Phelan explained that BEN-8744 is a potent, selective PD10 inhibitor, uniquely...

49 minutes ago